Supreme Court overturns ruling requiring UNUM Life to pay proper beneficiary

Back in October of 2009, the Court of Appeals held that UNUM Life was obligated to pay life insurance proceeds to the decedent insured's Estate, after it improperly paid them to the insured's ex-wife.  The insured was killed in a motor vehicle accident three days after his divorce; the ex-wife immediately claimed the insurance proceeds--in direct contravention of the divorce judgment.  On her claim form, she disclosed the fact of divorce, but UNUM made payment without inquiry into the latter fact.

This week, a majority of the Supreme Court overturned the lower court's ruling and held that UNUM had discharged its liability to the family when it paid the life insurance proceeds to the designated beneficiary.  It based its ruling on the claim that the insured decedent and his family had not given the insurer notice of the divorce or changed the beneficiary, even though the ex-wife had disclosed the divorce on her claim form.  Under the pertinent statute, UNUM's protection after payment is conditioned on the company not "receiving notice...by...any...person...of a calim under the policy and the divorce."   The lower courts had held UNUM responsible for that portion of the policy which the ex-wife had not spent.  The Supreme Court essentially held that despite notice of the divorce, the insurer owed no duty to investigate (by demanding a copy of the divorce judgment, for example) prior to issuing payment to the claimant.   The case is Gaylord Genaw, Jr. v. Cindy Genaw and UNUM Life Insurance Company.